Listed PSUs may not be exempt from 25pct pub holding proposal

It is reported that government is considering a proposal to increase public holding in listed state owned companies to 25% a move that would result in a host of follow on public offers.

The finance ministry has started the process of drafting rules to increase public holding in the listed companies in which the promoter holds more than 75% stake.

A senior ministry official told a news agency that "It would be explicit...there would be no exception. This would include public sector companies as well.”

The draft will be released soon for public comments. The official said that "The process (to draft rules) has started. The framework would be ready by this year end.”

The government has to amend the Securities Contracts (Regulation) Rules for the purpose. The rules provide for the requirements which have to be met with by public companies for the purpose of getting their securities listed on any stock exchange.

And once the framework is out, a slew of follow on public offers is expected to hit the market as about 180 companies have less than 25% public holding.

Among the leading PSUs where promoter, the government, holding is well above 75% are MMTC, NMDC, Hindustan Copper, Power Grid, NTPC, SAIL, Shipping Corporation, Neyveli Lignite.

Mr Pranab Mukherjee finance minister of India had said the average public float in Indian listed companies is less than 15%. Deep non manipulable markets require larger and diversified public shareholdings. He added that "This requirement should be uniformly applied to the private sector as well as listed public sector companies. I propose to raise, in a phased manner, the threshold for non-promoter public shareholding for all listed companies.”

(Sourced from http://www.steelguru.com/news/index/2009/10/21/MTE2OTkx/Listed_PSUs_may_not_be_exempt_from_25pct_pub_holding_proposal.html)